Hammer (Bullish Reversal)

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A hammer is a one day price pattern that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or near its opening price. The hammer signal does not mean bullish investors have taken full control of a security, but simply indicates that the bulls are strengthening. If this candlestick forms during the end of an uptrend, then it is called a Hanging Man.

Discussion

A hammer is a one day price pattern that occurs when a security trades significantly lower than its opening, but rallies later in the day to close either above or near its opening price. The hammer signal does not mean bullish investors have taken full control of a security, but simply indicates that the bulls are strengthening. If this candlestick forms during the end of an uptrend, then it is called a Hanging Man.